Second Life: Towards Consolidation and Cloud Computing

Now, some commenters on that are article might be mislead by the idea that “more people” means “more transactions”, and that “less land” means “less transactions”. As Catherine Fitzpatrick (handle: catfitz on Livefyre and elsewhere), much better known as Prokofy Neva, states, it was quite clever of Second Life’s creators to implement IP protection models and the ability to sell digital content safely and securely. But this should give people a hint why the “number of users” and the “landmass” are not directly related to “sales”. In fact, it’s all the other things that catfitz/Prok has mentioned — establishing relationships, the large number of participants in certain groups, and so forth, as well as a sense of confidence that the digital content economy actually works, that provides more sales (and no, it’s not the Marketplace).

What happens is that we’re watching consolidation happening: successful businesses are absorbing failing ones. The latter drop their land, so landmass shrinks. But the successful ones lose competition — or, by absorbing smaller (failing) ones, actually grow their content sales — so the result is more transactions. If we jump to a big brand shop in SL these days, we’ll see vendors from many different content creators, all under the same roof, brand, and even style, and sometimes we can see signs announcing that the brand owner is interested in “joining forces” with more designers. So we’re slowly moving away from the “single designer”-“single brand”-“single island” model (content creators have huge egos, and this is what everybody wanted: fame in SL!) and going towards the “single brand”-“multiple designers”-“possibly multiple islands” (but less than before!) model, where franchising a brand is now much more frequent than before.

This has a lot of implications. For the designers, it means deflating their ego a bit, in return of being part of a larger business which is more successful; but it also means less competition (and thus more sales). It means reduced costs: instead of being “forced” to buy their own islands and do their own promotion, now they rely on an overarching brand which promotes the shop and the brand first, and the designers next, but at a larger scale that the individual designers managed to attract. This, in turn, means more customers, more brand awareness, more sales.

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